MapMyIndia Halts ₹35 Crore Investment in Ex-CEO’s New Venture

Indian digital mapping provider CE Info Systems Ltd, commonly known as MapMyIndia, announced a significant strategic decision on Monday, December 9.

The company has opted not to proceed with an earlier plan to invest in a new business-to-consumer (B2C) venture proposed by its outgoing CEO, Rohan Verma.

Board Reverses Investment Decision

Through an official statement filed with the Bombay Stock Exchange (BSE), MapMyIndia confirmed its decision to halt any equity or debt investment in the new company.

“MapMyIndia’s Board has reversed its decision to make any equity or debt investment in a proposed new company. The Board will continue to explore and evaluate various opportunities in respect to B2C, while re-calibrating its investments in the B2C segment,” the company stated.

This announcement, made near the end of Monday’s market session, resulted in CE Info Systems’ shares rising nearly 16%, closing at ₹1,910, compared to the previous session’s ₹1,646.60.

Investor Feedback Influences Change

Earlier, MapMyIndia had committed ₹35 crore via compulsorily convertible debentures (CCDs) to acquire a 10% stake in Verma’s new venture. However, concerns from minority shareholders led the company to reconsider.

Rohan Verma himself addressed these concerns, stating that he would fund the new venture independently.

“MapMyIndia’s board approved the investment of ₹35 crore through CCDs… but after hearing the concerns of minority investors, I have decided not to take the investment and will use my own funds to run this venture,” Verma explained in an interview with The Economic Times.

This decision follows regulatory filings confirming that Verma will relinquish all executive responsibilities at MapMyIndia and transition to a non-executive director role effective April 1, 2025.

Focus Shifts Back to Core Segments

The company emphasized its renewed commitment to its primary business-to-business (B2B) and business-to-business-to-consumer (B2B2C) segments.

Together, these segments account for more than 99% of MapMyIndia’s revenues and represent substantial growth potential.

In a December 1 statement, the company highlighted its intention to enhance its leadership in digital mapping, geospatial software, and location-based IoT solutions.

These offerings include services such as digital maps as a service (MaaS), software as a service (SaaS), and platform as a service (PaaS).

MapMyIndia’s contributions to Apple Maps in India further solidify its position as a leader in the mapping industry. The company aims to continue leveraging these strengths to ensure sustained revenue and market dominance.

Market Reaction to Reversal

The decision to abandon the investment came after the initial announcement faced scrutiny from analysts and shareholders.

Concerns centered on issues of transparency and potential conflicts of interest, leading to a 12% drop in CE Info Systems’ shares over two sessions last week.

The reversal, however, sparked a sharp recovery. Shares climbed by 16% following the December 9 announcement, signaling a positive response from the market and shareholders alike.

Financial Performance and Future Outlook

Despite facing challenges, MapMyIndia has demonstrated resilience. For the second quarter ending September 2024, the company reported an 8.20% decline in net profit to ₹30.33 crore compared to the same period in 2023.

However, net sales rose by 13.82% to ₹103.67 crore, showcasing robust operational growth.

The company remains optimistic about its future prospects in the B2B and B2B2C domains, viewing these areas as the cornerstone of its long-term strategy.

Strategic Realignment Benefits All Stakeholders

Rakesh Verma, chairman and managing director of MapMyIndia, emphasized that the board’s decisions on November 29 and December 9 were made with the interests of the company and its shareholders in mind.

“We believe that the decisions taken by the Board on 29th November 2024 and today, 9th December 2024, are in the best interest of the Company and all its shareholders, including minority shareholders,” he stated.

This strategic realignment aligns with MapMyIndia’s goal of maintaining its leadership in the digital mapping sector while enhancing shareholder value.